As I mentioned in a previous post, decisions about which countries get listed on each year’s Special 301 Report are highly politicized.

To begin with, and somewhat at odds with its statutory basis, Special 301 reports only selectively identify countries that “deny adequate and effective protection of intellectual property rights.” There are a large number of countries that very clearly do not offer adequate and effective protection, yet are never identified in Special 301 reports because USTR and industry stakeholders do not consider these countries politically or economically important enough to warrant mention.

In fact, by some measures, the mean level of IP protection in cited countries is actually higher than the mean level of IP protection in countries that do not appear on the list. For example, the following figure plots the mean Park-Ginarte index in cited and non-cited countries for the years 1990, 1995, 2000, and 2005 (the years the index is available).

No one can fault USTR for focusing its efforts on political or economically important countries, but this means that listings should not necessarily be taken as indications of countries that have weak intellectual property rights, a point which I made in a previous post by noting that USTR has in the past placed the European Union on the Watch List.

Along the same lines, USTR placed Canada on the Priority Watch List every year from 2009 to 2012, alongside countries like India, Indonesia, Pakistan, and Russia. Israel has called USTR citations of the country “confusing” given the level of protection in Israel compared to most other Priority Watch List countries.

Clearly, what gets a country listed can vary tremendously. Often, though, deciding whether and where to place a country in the Special 301 report is driven primarily by political considerations rather than objective assessments of the level of IP protection in a country. Wikileaks cables demonstrate this quite clearly. Recall that in addition to input from stakeholders, USTR collects input from embassies around the world when preparing the Special 301 report. Among the quarter-million leaked Wikileaks cables, over 300 cables originating from more than 90 U.S. embassies and consulates deal primarily with Special 301. These cables are concentrated early in each year, since they tend to provide input to USTR prior to the April publication of the report, or alternatively provide reactions immediately following the publication of the report:

The contents of these cables are telling. Embassies frequently recommend that countries’ Special 301 status be raised, lowered, or stay the same based on political considerations. In some cases, embassy staff mention how non-IP issues affect countries’ Special 301 status. Recommendations for listing make references to exerting “pressure” and concerns about maintaining the “credibility” of the process. In the following sections, I briefly discuss cables from Taiwan, Saudi Arabia, Bolivia, and Norway.

Taiwan

In a cable from the American Institute in Taiwan, dated December 13, 2004, the author argues that downgrading Taiwan from the Priority Watch List to the Watch List will have important “public relations” effects, and notes that although pharmaceutical data exclusivity is an outstanding IP issue, Special 301 will have no effect on the Taiwanese government’s position; thus, the author cautions against conditioning Taiwan’s Special 301 listing on this issue:

AIT/T [American Institute in Taiwan/Taipei] supports downgrading Taiwan from the Priority Watch List to the Watch List in the current out of cycle review. Doing so will reinforce Taiwan’s reorientation towards protecting intellectual property and provide a timely public relations victory for advocates of strong IPR protection within the government. Failure to move Taiwan from the PWL to the WL will devalue the 301 process in the eyes of Taiwan officials and will not lead to improved protection of intellectual property, including pharmaceutical data…

Taiwan’s Special 301 status will not significantly influence the government in its decision whether to lobby strongly for early passage of the DE [data exclusivity] bill… The DOH [Department of Health] is not motivated by international perceptions of Taiwan’s intellectual property regime… Conditioning Taiwan’s 301 status on the passage of the DE bill by the date of the regular cycle review is unlikely to prove a successful strategy.

A second cable from Taiwan, dated January 12, 2009, reveals that unspecified members of a U.S. Trade Policy Review Group wanted to make Taiwan’s Special 301 listing contingent on other issues unrelated to intellectual property:

I am disappointed that factors unrelated to IPR protection have delayed completion of the review. With the review poised for final interagency review, I would like to stress the critical importance of maintaining the integrity of the Special 301 IPR process. Allowing issues unrelated to IPR to affect the Special 301 review would, in my view, threaten the efficacy of what has thus far proved our most potent means of advancing a major bilateral trade priority… In view of this reality, we must ensure that the Special 301 mechanism remains a viable tool for advancing our interests. Linking 301 to unrelated issues, however important, risks undermining our credibility while limiting our future options for achieving progress on this and other priorities. I hope every member of the TPRG [Trade Policy Review Group] will put the decision on the pending out-of-cycle review within this broader context, and remove Taiwan now from the Special 301 Watch List.

Saudi Arabia

On January 6, 2009, the U.S. Embassy in Riyadh sent a cable reporting on discussions between embassy staff and an industry trade group. Each year, several trade groups provide detailed recommendations to USTR about where they believe countries should be placed in the Special 301 report. As this cable shows, even these recommendations can be finagled. The trade group was concerned that too severe a designation would backfire. As a result, the group discusses a quid pro quo: if the Saudi Arabian government engages in specified actions, the group will offer a less severe recommendation:

Although the International Intellectual Property Alliance (IIPA) is preparing to recommend that Saudi Arabia be placed on the Special 301 Priority Watchlist, representatives in Riyadh said they feel “handcuffed” into this recommendation, and would prefer to recommend a more favorable rating… However, as the SAG [Saudi Arabian Government] has gained momentum and motivation to combat IPR violations in recent months, IIPA fears that a negative recommendation, while “required” under their methodology, will do more harm than good…

Butler said IIPA is looking for ways to positively reinforce SAG efforts while still maintaining its institutionalized standards. To that end, he described to Econoff [the embassy’s economic section] an action plan that, in IIPA’s view, might result in a better ranking for Saudi Arabia. According to Butler, if the SAG took action against street vendors and fully populated the website of ongoing cases maintained by the Ministry of Culture and Information (MOCI) (ref B), the IIPA would be prepared to offer a recommendation that Saudi Arabia remain on the Watchlist.

Bolivia

In this cable from April 30, 2007, the U.S. Embassy in La Paz recommends against placing Bolivia on the Priority Watch List because of the “damage” such an action might cause. The author notes that a more severe listing would not have any positive effect:

Piracy and counterfeiting are serious problems, existing intellectual property rights (IPR) legislation is weak, and enforcement is inadequate. Post believes prospects for improvement are slim, especially given the Morales’s administration’s inattention to IPR. Post does not recommend any stronger steps against Bolivia at this time, however, as such an action could encourage anti-American actions and damage ongoing efforts to educate the Bolivian public on IPR…

While the IPR situation in Bolivia merits continued standing on the Watch List, Post recommends against any stronger action at this time. Placement of Bolivia on the Priority Watch List would have no positive practical result, and the effectiveness of any future IPR education and outreach would be damaged by Bolivian government outrage at a change in Special 301 status. For these reasons, Post recommends no change to Bolivia’s Special 301 Watch List status.

Norway

In a cable from the U.S. Embassy in Oslo, dated March 17, 2009, the author makes references to discussions of “relabeling” IP deficiencies in Norway as market access issues. The author also notes that a Special 301 listing provides U.S. negotiators with “leverage,” and indicates that the loss of such leverage is a good reason to keep Norway listed:

Post understands that there is consideration of delisting Norway, relabeling the pharma situation as “market access issues” rather than deficiencies (Ref B). Doing so would produce real, unintended negative consequences for the USG [U.S. government]…

We believe that the increased leverage we have seen with the GON [Government of Norway] as a result of the listing will immediately disappear if Norway is delisted. Quite simply, re-characterizing the listing as an issue affecting market access carries much less influence, and clout, and Norway will take it as a sign we no longer really care about the matter.

I’ve only touched on a few of the hundreds of cables dealing with Special 301, but by now it should be quite clear that designations are far from an objective, technical process. Rather, USTR and U.S. embassies around the world consider listing, removing, upgrading, and downgrading countries for a variety of political reasons: public relations, linkage to unrelated non-IP issues, bargaining leverage, concern about whether listings will be effective or backfire, etc. Even whether an IP issue is considered a “deficiency” or a “market access” issue is a political decision.

The other major point to take away from these cables is the significant influence that key stakeholders, like industry trade groups, have on both embassy recommendations and USTR decisions. Embassy staff regularly speak with representatives of the IIPA, MPAA, IFPI, PhRMA, and BSA. These trade groups do not represent the full spectrum of views about appropriate intellectual property policy; to the extent that they wield a disproportionate amount of influence on the Special 301 process, that process is necessarily biased.

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1 Response to Special 301: The Politics of Listings

Your critical analysis of the co-relation between the Special 301 Process and IP protection is quite fascinating. As an IP lawyer with a keen interest in international IP Policy, I’ve two questions – (a) When you state , “There are a large number of countries that very clearly do not offer adequate and effective protection, yet are never identified in Special 301 reports because USTR and industry stakeholders do not consider these countries politically or economically important enough to warrant mention” , do you have any cogent evidence of the countries that may fall in this list?

(b) Are you by any chance following the 2016 Special 301 Review, specifically in the context of India?

Any thoughts would be deeply appreciated.
(On a side note, even I’m a GW alum and keenly follow your work. The global politics of IP is intriguing to say the least.)